SEC's Clayton worries about private markets, negative rates

By Svea Herbst-Bayliss and Jessica DiNapoli
FILE PHOTO: Jay Clayton, Chairman of the U.S. Securities and Exchange Commission, speaks at the Economic Club of New York luncheon in New York City

By Svea Herbst-Bayliss and Jessica DiNapoli

NEW YORK (Reuters) - U.S. Securities and Exchange Commission chair Jay Clayton said on Thursday he was concerned about the growth of private markets and negative interest rates as policymakers try to stimulate growth.

Clayton, at the CNBC Institutional Investor Delivering Alpha Conference, said he feared that retail investors do not have access to companies that grow rapidly in private markets before making themselves accessible in public markets.

"I am concerned that our public markets are used more for liquidity than growth," he said.

The We Company, the parent of co-working space landlord WeWork, this week delayed plans to go public after its private valuation of $47 billion was slashed by more than half.

"Why are people waiting so long to access capital from our public markets?" Clayton said. "Is it because there’s so much capital in private markets or are we too short-term oriented, (is there) too much cost associated with going public?"

Companies traditionally went public roughly six years after founding. Now they are often not coming to market until 10 to 12 years after they were created, analysts said.

While he is not a central banker monitoring interest rates, Clayton said, negative rates are a "new (situation), a significant one and widespread one."

"They have never modeled for negative interest rates," he said.

This week, the U.S. Federal Reserve cut interest rates by a quarter of a percentage point, its second reduction since July. The move came as growth still looks strong but there are signs of slowing, and as President Donald Trump pushes for bigger reductions.

Clayton said most "good companies" considered all their stakeholders, not just shareholders, in response to a question on a corporation's purpose.

"I've never been in the boardroom of a good company that wasn’t thinking about customers, employees and community," Clayton said. "What is their legal obligation? That’s a different story."

(Reporting by Svea Herbst-Bayliss and Jessica DiNapoli in New York; Editing by Bernadette Baum)